The accusation, which has yet to be confirmed by any independent groups (the technical details have not yet been released), could potentially affect approximately 300,000 such credit and bank card terminals across Germany, with a "handful in Austria." The attack is specific to the Artema Hybrid Terminal, which is sold under various brand names by VeriFone.

Karsten Nohl and Thomas Roth, of Security Research Labs, say that they have been in touch with VeriFone for six months and have provided technical aid to the company and a German government agency. They are now coming forward to put more pressure on the company—and to raise awareness, “preferably before any criminal can reinvent these attacks.”

“Without some drastic publicity, I don't think that shopkeepers will know about it,” Nohl added.

In a e-mail to Ars, Dani Siemon, a VeriFone spokesperson, said that there have been no such real-world attacks so far. “This is one lab that has reported (unsubstantiated) that they were able to do this,” she wrote. “No credit card users are at risk.”

From playing pong to spoofing ATM cards

Nohl told Ars on Friday, without disclosing specific details, that by exploiting a buffer overflow in the terminal, a “crucial memory region” of the device could then be overwritten with executable code.

The hacks, Nohl and Roth say, could potentially allow an attacker to gain full control of the banking terminal, which would allow a change in transactions in value or for potentially spoofing transactions. They even demoed how to play Pong directly on the card terminal.

“The worst case scenario is somebody breaks into a network of a large retailer chain and then installs this malware on 10,000 payment stations,” Nohl said. “Within a two-month period, it would see a million different cards. Of those million, the malware has copies and PIN numbers and can use [cloned cards] for payment and to get cash from ATMs, and at that point it would be impossible to get them. What are you going to do, replace them all?”

The German public television network ARD ran a prime time story nationwide (German) profiling Nohl and Roth and their work on Thursday evening. In that story, VeriFone only provided a written statement, and in response to questions submitted by Ars on Friday, has only responded in a similar fashion.

VeriFone wants more details, is continuing investigation

“Despite several requests by us for them to provide information needed to duplicate an attack scenario, the security firm instead chose to publicize its efforts, which has led to dissemination of misleading and speculative information,” he wrote.

“At no point was the security module or encrypted PIN compromised in this reported attack scenario; neither was the integrity of the EMV transaction violated. As the security module is not affected by the attack scenario, it is not possible using an amended application program to modify the security module's PIN processing of a successful card payment transaction.”

He cast further doubt on the immediate claim, saying that the company was working with a German Banking Association (DK)-approved security lab to test Nohl and Roth’s claims.

“Since the first indication, we have been working closely with an approved DK lab to investigate the reported breach scenario but have not been able to replicate the attack scenario,” he continued. “Subsequently, VeriFone retained additional independent expert penetration testing firms with expertise in payment security compliance, to assess the breach scenarios and potential ramifications.”

But the company remains committed, he said, “to fully investigate this situation, communicate with local authorities, and report back to you on our findings.”

UPDATE: Dani Siemon wrote to Ars on Friday evening to say: "To be specific, they are sold in Germany with a handful in Austria. Without a doubt, VeriFone does not sell them in the U.S. We do not have EMV yet and it is a style that would not be effective in the U.S. market." We have changed our subhed accordingly.

UPDATE 2: Karsten Nohl also wrote to Ars on Friday, responding to VeriFone's assessment.

"None of the statements regarding card cloning actually mean that PIN intercept and mag stripe cloning are prevented. All the vendor is saying is that a fraudster needs to be a little smart about how to trick the user into entering the PIN number. Take, for instance, SDA EMV cards—these cards require the PIN number to be send unencrypted through the processor that we hacked. And that's just one of at least four possibilities to steal the PIN.

I disagree that EMV is not affected. Inputs into an EMV transaction can be altered by the terminal. In addition: More than one EMV transaction can be generated while the card is in the device. A hacked payment terminal breaks one of the security assumptions of EMV."

“At no point was the security module or encrypted PIN compromised in this reported attack scenario; neither was the integrity of the EMV transaction violated. As the security module is not affected by the attack scenario, it is not possible using an amended application program to modify the security module's PIN processing of a successful card payment transaction.”

I think Ars should have commented this a bit. AFAIK (from reading other articles) this statement is correct but only half of the truth. The attack takes over the devices which is then used to simulate a valid transaction to the card user. For him there is no way to figure out that this is not a normal transaction. Of course the device keeps the PIN and card data.So no, the integrity of the EMV transaction was not violated (because there are actually no real transactions involved in this attack, just data collecting), but this completely misses the point.

Just recently Ars ran this article about insecurity of magnetic stripe cards. Now we have a possible attack vector on chip based systems (the terminal is a chip reader). The current card based payment system is definitely flawed ...

Just recently Ars ran this article about insecurity of magnetic stripe cards. Now we have a possible attack vector on chip based systems (the terminal is a chip reader). The current card based payment system is definitely flawed ...

This is hardly only possible attack on CCs. The new "secure" systems have been cracked for a few years already. It's better than magnetic stripe but not by much. Main reason was to try and get away from paying for fraud. But sadly researchers found a lot of holes so now days courts don't consider the systems as secure so CC companies end up having to pay for fraud instead of pushing it on to customers (who they are robbing already with insane level fees).

The chip and pin debit cards used in Canada store your pin number on the chip. When you go to purchase something you insert your card into the reader, it handshakes, reads some data on the chip, . This data includes your bank card number and the pin. You then type in your pin, the Pin is verified locally at the terminal. At no point is the pin verified with your bank. With the magnetic strip, your pin is verified at the bank.

So it could be fairly easy to intercept the data if you have hacked the reader. For that matter you could probably own the machine by using a chip that's been compromised or changed to inject code.

Just for fun, when I was a kid I build a cardreader, just by hooking up the magnetic head from an old freestyle, and sampling the signal with my amiga. (this was some time ago.) So, from experience I know magnetic strips are horribly unsafe, not only from a security point of view, but from a practical point of view when I accidently erased part of the strip on my card. =)

...Well they probably really couldn't write the software in anything but C.

Perhaps not, but your comment reminded me of the B-method. Software designed this way is reportedly very reliable (its proponents love to cite its use in a fully automated line of the Paris Metro), but I don't know if its product is resistant to deliberate attack.

In a e-mail to Ars, Dani Siemon, a VeriFone spokesperson, said that there have been no such real-world attacks so far. “This is one lab that has reported (unsubstantiated) that they were able to do this,” she wrote. “No credit card users are at risk.”

Woman, if your credit card terminal can be hacked, then users of said terminals are, by definition, at risk. That's what "risk" means... the chance that something bad could happen.

So they complained that they don't have all the data to reproduce the scenario but they says that "your data are safe !" That doesn't seems very coherent. (maybe they have good explaination, it's possible, someone can explain this ?)

In a e-mail to Ars, Dani Siemon, a VeriFone spokesperson, said that there have been no such real-world attacks so far. “This is one lab that has reported (unsubstantiated) that they were able to do this,” she wrote. “No credit card users are at risk.”

grimlog wrote: Woman, if your credit card terminal can be hacked, then users of said terminals are, by definition, at risk. That's what "risk" means... the chance that something bad could happen.

From what I gathered, there hasn't been an attack because the attack on the cloned accounts will happen LATER when the subverted accounts get hacked by somebody that's harvested the credit card number and the PIN. As far as I can tell, the CC terminal DOESN'T actually complete an invalid transaction as the primary activity, it just collects the CC data and PIN and lets the valid transaction to occur. In any case, Verifone is acting like a bunch of PR-clueless idiots. Their freaking CC terminals are everywhere! I don't know how to avoid them other than to refuse to slide my card through them and pay by cash.

They haven't figured out that a risk to a customer using the CC terminal is a risk to them (Verifone). Eventually a certain number of credit card holders will refuse to use their terminals and Verfone's business will crater.

...Well they probably really couldn't write the software in anything but C.

Perhaps not, but your comment reminded me of the B-method. Software designed this way is reportedly very reliable (its proponents love to cite its use in a fully automated line of the Paris Metro), but I don't know if its product is resistant to deliberate attack.

The problem there is, that they are probably using the smallest (hence cheapest) µc they could find. Which means not only is the whole thing extremely low level it also has to have a minimal footprint. I'm sure you can write business logic with that technique, but I can't imagine how you'd specify low level things like ISRs, etc. in such a language.

In C you even have the problem that bounds checking is a pretty hard problem, even if you wanted to do it. In c++ you can just make sure that [] for vectors and co does the checking (and there's no reason to use raw arrays), but in C with all the raw pointers?

As someone who is working as a VeriFone terminal software developer for over three years, I will just say that there is no chance to use this exploit to steal card data. Article is sensationalistic, poorly researched and completely devoid of facts, and exploit authors are irresponsible to say the least. I hope they get arrested for not providing exploit details to VeriFone before going public.

I will just say that there is no chance to use this exploit to steal card data.

Quote:

I hope they get arrested for not providing exploit details to VeriFone before going public.

Surely if the first is true there is no issue with the latter?

Now what would be impressive is if any (notional) buffer overflow could be exploited by a malicious card itself. Imagine:Pop in, buy something (legitimately). come back in a few days, pull the stored card details and pin (doubt you could store that many on the device but surely a few hundred at least?).

You wouldn't need to clone the card at a chip level to use the resulting data, just create a magnetic stripe one and withdraw money with the known PIN.

I actually would prefer the system to have separate PINs for purchases and money withdrawal, but I appreciate that would be very confusing to lots of people.

And good on them for going public. I personally report maybe half a dozen security issues per year to assorted vendors... have done for about a decade now... and not even one time has anyone ever fixed anything I report.

The public has NO IDEA just how much vendors don't care whatsoever about security flaws...

“At no point was the security module or encrypted PIN compromised in this reported attack scenario; neither was the integrity of the EMV transaction violated. As the security module is not affected by the attack scenario, it is not possible using an amended application program to modify the security module's PIN processing of a successful card payment transaction.”

I think Ars should have commented this a bit. AFAIK (from reading other articles) this statement is correct but only half of the truth. The attack takes over the devices which is then used to simulate a valid transaction to the card user. For him there is no way to figure out that this is not a normal transaction. Of course the device keeps the PIN and card data.So no, the integrity of the EMV transaction was not violated (because there are actually no real transactions involved in this attack, just data collecting), but this completely misses the point.

You're right. It reminds me the "yescard" controversy in France more than 10 years ago. The security researchers told the system was broken (which was true in some cases), banks and cards suppliers told nobody could guess the PIN stored in the chip (which is still true today) and journalists hyped the security breach (the fraud level on chip cards is still lower than checks or even bank notes). To assess the level of threat, some questions have to be answered :- which types of transactions are targeted (offline, online)- is it possible to collect enough data to forge a card or a transaction- who is responsible for the fraud (in some countries, as long as no PIN or 3Dsecure authentication has been used, the bank is liable)